Can the Global Biodiversity Framework mainstream nature positive investments?

Jan 19, 2023
The author

CPIC Secretariat

Bankable Lead

Key takeaways of the panel discussion Capital flows in conservation finance: the impacts of the Global Biodiversity Framework at the January 2023 CPIC Semi Annual Meeting

As the gavel came down at the Biodiversity COP15 in Montreal in December 2022, a landmark agreement was reached and we entered into a new era for nature and humanity. 196 countries adopted the Kunming-Montreal Global Biodiversity Framework (GBF) committing the world to halt and reverse biodiversity loss by 2030.

But as the dust settles, what have we learnt from previous global nature frameworks, what challenges does this framework face and what are the opportunities for conservation finance? The January 2023 CPIC Semi Annual Meeting gathered leading conservation finance experts to address these questions. The meeting included an update on CPIC’s activities, a panel discussion on the GBF and four interactive breakout sessions on biodiversity credits, investing in early stage nature ventures, technology for metrics and key outcomes of COP 15 and COP 27 for conservation finance.

Frank Hawkins, Advisor at IUCN and CPIC Steering Committee member opened the meeting by commenting on the GBF, saying, “this is our CPIC mandate in black and white.” Reflecting on Target 19 of the agreement on resource mobilisation he concluded saying, “we are in a moment when the opportunity is in front of us. This is now a societal goal, it’s up to the whole of society and CPIC’s purpose is to help everyone in society to contribute.”

The panel discussion, titled Capital flows in conservation finance: the impacts of the Global Biodiversity Framework was moderated by Delfina Lopez Frejido, co-lead, Finance for Nature at IUCN and panellists included Juha Siikamäki, Chief Economist at IUCN, Liliana Martinez, Head of Project Implementation & Global Biodiversity at South Pole and Eli Fenichel, Associate Director for Natural Resource Economics and Accounting at the White House Office of Science and Technology Policy. Here we provide a summary of the key discussion points from the discussion which you can also watch in full here.

A new era of conservation finance

We know that any global agreement is only as good as its implementation. But the GBF is set apart from the previous goals for nature, the Aichi Targets, in that it is ambitious, specific and includes measurable timelines. Juha Siikamäki, Chief Economist, IUCN, noted key reasons for optimism that, “we are now in a different world to that of the Aichi targets… Aichi did not implement resource mobilisation. Now there is a much greater deal of optimism and participation by all actors, and especially the private sector.”

The good news is that the conservation finance sector has not been static. Eli Fenichel, Associate Director for Natural Resource Economics and Accounting at the White House Office of Science and Technology Policy noted that a community of experts have been thinking and working on this topic for some time. “Many groups are learning to talk, rather learning to dance together,” Fenichel said, which was evidenced by the key role played by the private sector at COP 15.

The roadmap to achieving these targets is set out broadly in the agreement, but the specific actions will be formulated, tested and implemented in various contexts in the next seven years. This points directly to the significant opportunities and responsibility of CPIC members and the conservation finance sector to shape these actions. Commenting in the panel discussion on the GBF, Liliana Martinez, Head of Project Implementation & Global Biodiversity at South Pole said: “this is a real step up in providing the roadmap and entering the implementation phase. Now there is a clear responsibility on which we will all be measured.”

Biodiversity must be part of any balanced portfolio

The momentum generated by the GBF has real potential to move biodiversity out of its niche and into the financial sector mainstream. This means increasing the appetite for risk in the conservation finance sector and increasing nature positive impacts of financial flows that are currently degrading natural resources at unsustainable rates.

“We need to leverage how we encourage risk, knowing that some things won’t work out and develop ways of thinking about innovative concepts,” stated Eli Fenichel highlighting the difference in how conservation and finance sectors see risk. He continued highlighting that finance is very good at breaking down complex problems to manage risk where the conservation sector operates on low risk, often with an ‘every piece of nature matters’ approach. The ultimate goal, according to Eli Fenichel, is that, “we need to get to a point where biodiversity investments is just part  of a responsible, balanced portfolio.

Addressing the challenges

Metrics, transaction costs and the increased role of indigenous communities were some of the areas of improvement discussed by the panellists. Liliana Martinez zoned in on the crucial role of indigenous peoples and local communities being fully integrated in the design and implementation stages of the project, treated as partners and leaders. “Including these communities in decision making is the only way for these to be long term, sustainable projects,” she concluded.

Refocusing on Metrics, accounting for biodiversity gain in a consistent and comparable way across governments, intergovernmental institutions and the private sector is a crucial step for Liliana Martinez. Addressing this challenge, she said, “there is a clear opportunity for addressing projects from a landscape approach to maximise results that combine climate, water and nature metrics.”

But even with sound and comparable impact data, the mismatch between the lowest amount investors will consider for investment and the size of many projects has prevented conservation finance from scaling. According to Juha Siikamäki, “we need to figure out how to scale up the projects and drive down the transaction costs.”

Opportunities for the bold

“The fact that there are market failures show there are opportunities for the bold,” offered Eli Fenichel in his concluding remarks. One of the major opportunities discussed in the interactive breakout sessions included how the outcomes of COP15 further a biodiversity credits market, what pilots are currently underway and how to align on metrics of biodiversity gain.

A clear outcome from this discussion is to ensure that through collaboration, and coalitions like CPIC, any biodiversity credits are additional or ensure there is an overall gain from the purchase of credits. Crucial to building trust and credibility in the market is to improve metrics, another topic of the breakout sessions. Pivotal and Nature Metrics, two relatively new companies that have attracted significant investment, offered insights into the exciting opportunities for digitising metrics and using novel technologies like EDNA to track biodiversity gain.

It is clear the global market for financing nature’s recovery is moving, private sector interest is growing and public appetite for action on nature is at a record high. The GBF looks set to significantly increase this momentum.

Looking ahead to COP16 in Turkey, it is crucial that the conservation finance sector continues to stay out in front and lead, exploring new sources of private finance from the private, public, philanthropic sectors while spurring nature positive economic and environmental policy.

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